You will likely have relied on IFCO Systems, even if you haven’t heard of them. The Munich-headquartered company provides reusable packaging for fruit, vegetables, meat, baked goods and beyond for supermarkets like Waitrose and Walmart. Its crates are used in over 2 billion shipments per year. (They typically last a good decade. They are then recycled to make new crates again. IFCO is big on the “circular economy”...)
The company was bought by investment firm Triton Partners and Abu Dhabi’s sovereign wealth fund in 2018. Under its new owners it has embarked on an ambitious business transformation programme underpinned by technology. That has included modernising its core platforms and infrastructure – which is spread across three global data centres – to streamline operations, maximise asset productivity, improve customer service and deliver innovations that reduce friction for its stakeholders.
IFCO has 1,300+ staff working in over 50 countries. Among them, and leading its digital transformation, is Global Chief Information Officer (CIO) Kare Heikkila, who joined as a consultant before taking a permanent role.
He told The Stack that a highly transformation-focussed senior leadership team and big ambitions made the permanent CIO role enticing: “When you’re working for a private equity-backed company, things have to move fast; you have to deliver results quickly. This was an exciting journey that I really wanted to be part of.”
“Having worked with the stakeholders for a number of months I realised it was a good cultural fit for me. The board and senior leadership really understand what we're doing in IT – quite often I've seen the opposite, where IT is still treated as a cost centre, as opposed to something that can really drive the company forward.”
His job is split approximately 70/30 in favour of transformation versus keeping the lights on “of course, as CIO, the stable running of core systems is fundamental to my role; transformation doesn't matter if the backbone or core systems don't run smoothly and aren’t also evolving for customers.”
(Pressed by The Stack on transformation budget, he notes that “it’s not a pot of money to use in IT as we wish. Each initiative is budgeted for separately and in detail, even the smallest. We put a huge amount of effort as a team into this budgeting process to make sure we have reliable and accurate budgets; the benefit of that is it enables us to make much more informed decisions. I think that is a really helpful discipline to have…”)
Digital transformation at IFCO Systems: The priorities
The CIO launched an ambitious technology transformation programme two years ago to facilitate the growth of the business. He told us: “One objective is to drive internal efficiencies through modern enterprise platforms and supply chain planning tools, as well as facilitating better decision making through state of the art data and analytics capabilities. It’s also, of course, about improving our customer experience by offering easy to use scanning solutions and intuitive portals and modernising our whole underlying infrastructure.
One focus of this programme has been to support the digitisation of IFCO’s supply chain which will, for example, “remove unnecessary admin work for our customers and to provide them with other value-adding services.
“We want to get to the point where customers have a seamless experience with us…”
Core service towers and keeping intellectual capabilities in-house
The IFCO CIO’s efforts are split between around 50 people in-house and perhaps double that with partners. Building a strong talent base has been a priority for him however: “During my tenure, we've hired quite a few people. I want to keep intellectual capability within our internal team. Of course, we use external companies to provide specific expertise, capability and capacity that we don't have within our internal team.
"But I never want to be in a position where we have outsourced our critical knowledge to other companies.
“So our team is now structured across key service towers. There’s a tower for corporate systems, there's a tower for customer systems; one tower is about data analytics, then cybersecurity, and infrastructure architecture as well as transformation services. That's a structure I designed when I joined the company and I think it’s working well.”
Business process optimisation and benefits realisation seem to be the thing that floats this CIO’s boat, rather than geeking out hard on technology; perhaps that’s natural to a former management consultant? We put this to him and he agrees: “I’m not excited by the technology. It’s a means to a goal. What drives me is seeing the business transformation…”
Security, NIST, and the board…
Discussing this, one interesting example that comes up is cybersecurity.
“I recruited a CISO into my team and cyber resilience has been at the heart of our transformation from the outset” he notes, from 24/7 external security monitoring, to beefed up endpoint security and company-wide training courses on cybersecurity awareness and improved disaster recovery “so, if anything happened, we also prepared to run the business without some of the critical applications and recover assets quickly” he notes.
Kare Heikkila also points out that while cybersecurity is appreciated by senior leadership in the organisation it is not the easiest topic to communicate: “It can be quite a tricky area.”
His team has – “in my view really well!” – created some simple metrics to communicate progress on security to the board and the senior leadership “on where we are, where we want to get to, and how are we progressing in our cyber journey, and that way, we've managed to get the backing and investment needed.”
(His team uses the NIST framework; a detailed assessment framework which is, he notes, “not a great communication tool… we simplified it to three metrics to demonstrate where we are in our journey…”)
A key challenge for most CIOs and IT leaders that The Stack speaks with regularly is sourcing the right talent. Heikkila says he’s been pleased with the recruitment he’s made: “I’ve hired many people for our company. People find the transformation journey really exciting; that seems to have been a big attraction. But equally important, and surprisingly important for me was the values and purpose of the company… that’s why people are joining, for the environmental agenda. Our mission is making the food supply chain sustainable, and that has been a real attraction for people when making a decision about which company they join.”